Aqua Man To The Rescue

On Wednesday, a line ruptured in Springfield, Mass., shooting water four stories into the sky.

On Monday, a water main blew at Cherry View Elementary School in Lakeville, Minn., closing the building for the rest of the year.

On Sunday, a water main break forced guests to evacuate the New York Palace Hotel in Midtown Manhattan.

On Saturday, a water main burst in downtown Washington, turning an excavation site into lake, submerging several pieces of heavy equipment, flooding buildings and shooting mud down 17th Street NW. The blown line was installed in 1897.

Search the Internet at any given moment and you'll likely find fresh tales of bursting pipes. Sometimes they shut down entire city blocks. Sometimes they create sinkholes large enough to swallow cars.

Some of these incidents get more attention than others, like the one that blew in the middle of the street in New York's Flat Iron District last February, flooding neighboring buildings and the subway. That line was installed 98 years ago.

Most Americans are served by municipal water systems, and municipalities often have more pressing things to fund besides their ancient pipes.

"We have to," he said in a telephone interview. "The regulators would not put up with broken pipes. We'd lose our franchise."

Bryn Mawr, Pa.-based Aqua America, has spent $1.8 billion in improving its infrastructure over the past five years. The water utility serves about 3 million people in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Florida, Indiana, Virginia, and Georgia.

Over the past 20 years, it has been through about 250 acquisitions -- deals that often privatize aging public water systems.

They can range from entire towns to small, neighborhood well systems originally put in place by developers. As the decades wear on, and the pipes need replacing, a lot of people start to wonder why they are in the water business, said Mr. DeBenedictis, who has been CEO of Aqua America since 1992.

They sell their systems to him. He fixes the pipes.

With a market capitalization of $4.6 billion, Aqua America is the nation's second-largest publicly traded water utility behind Voorhees, N.J.-based American Water Works Inc. (AWK) with a market cap of about $7.6 billion.

There are a handful of other publicly traded water companies, and then there are about 30,000 smaller private water suppliers nationwide forming a highly fragmented industry ripe for consolidation, Mr. DeBenedictis said.

Buying stock in a water company is about as boring as investing gets, unless your goal is a relatively safe investment with steady returns.

Since 2007, Aqua America's stock has outperformed the Dow Jones Industrial Average and the Standard & Poor's 500. Revenue has grown at an annualized rate of 5.6% during this period. Net income has grown 15.7%, annually. And the company has increased its annual dividend from 50 cents to 76 cents per share.

This growth comes despite a recession and a housing crisis putting a crimp on the kind of water-thirsty new developments that Aqua America serves. The company, incidentally, also offers a side-bet on energy, having formed a joint venture that supplies water by the millions of gallons to gas-well fracking operations in Pennsylvania's Marcellus Shale.

One way Mr. DeBenedictis hopes to continue growing his company is through more acquisitions. Buying smaller, private water companies is easier than buying systems owned by municipalities. He said he often faces opposition from public employee unions that don't want to let go of their utility jobs--and from people who think water is too critical a resource to be trusted to profiteers.

"There are some environmentalists who think water should be free," Mr. DeBenedictis said.

Perhaps water should be free, but its delivery is not. The American Water Works Association estimates that replacing America's water pipes could cost more than $1 trillion in the coming decades.

And the American Society of Civil Engineers gave "D" grades to America's drinking water and waste water systems in the group's 2013 Report Card for America's Infrastructure.

"It's become a nice PR tool," Mr. DeBenedictis concedes. "Civil engineers like to design and build things. That's how they make their living."

Still, no matter how you grade them, America's aging water mains are blowing. "There are an estimated 240,000 water main breaks per year in the United States," the civil engineers report said. "Much of our drinking water infrastructure is nearing the end of its useful life."

I searched the Internet one last time before I finished this column on Wednesday. There was another water main break in Bangor, Maine. The Bangor Daily News' website ran a nice photo of muddy water pooling on a street corner. It's such a common sight, you wonder why it even makes the paper.

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is published each Tuesday and Thursday at 9 a.m. ET. Contact Al at al.lewis@dowjones.com or tellittoal.com)